Yount Trading Stamp Co

question 12

Multiple Choice

Yount Trading Stamp Co.records stamp service revenue and provides for the cost of redemptions in the year stamps are sold to licensees.Yount's past experience indicates that only 80% of the stamps sold to licensees will be redeemed.Yount's liability for stamp redemptions was $7,500,000 at December 31, 2010.Additional information for 2011 is as follows: If all the stamps sold in 2011 were presented for redemption in 2011, the redemption cost would be $2,500,000.What amount should Yount report as a liability for stamp redemptions at December 31, 2011?

• A)$9,100,000.
• B)$6,600,000.
• C)$6,100,000.
• D)$4,100,000.

Identify characteristics and non-characteristics of perfectly competitive markets.

Recognize the role and implications of being a price taker versus a price maker in perfect competition.

Describe the demand curve faced by a perfectly competitive firm.

Explain the concept of standardized products in contrast to differentiated products in market structures.

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Definitions:

Watered Stock

Shares issued by a company at a value much greater than its asset worth, inflating its apparent value without actual backing.

Fair Market Value

An estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would likely pay to a knowledgeable, willing, and unpressured seller in the market.

Business Judgment Rule

A legal principle protecting corporate directors and officers from liability for decisions made in good faith and in the best interest of the company.

Derivative Action

A lawsuit brought by a corporation’s shareholder on behalf of the corporation against a third party, often an insider of the corporation.